At the end of May, IEN subscribers were given the opportunity to participate in an Aberdeen Group survey on the engineering agenda. The report, The Engineering Executive’s Strategic Agenda: Designing for the Enterprise and the Environment, is now available.
Report Description
When it comes to running an engineering organization, engineering executives are facing pressures that seem to be mounting by the day. Through a survey of over 560 discrete and process manufacturers, Aberdeen has found that while shrinking development schedules is the top pressure (60%), rising raw material costs (32%) and decreasing product price-points (28%) make for a difficult combination for the engineering organization.
While identification of differentiated strategies offers executive direction, more detail is often required for the tactical execution of change. The first question to address is a simple one: given their formidable challenges, are any engineering organizations performing well?
Key Areas of Differentiation
Studying performance among the survey group on four key metrics, researchers classified the top 20% of respondents as Best-in-Class; the middle 50% as Industry Average, and the bottom 30% as Laggards. Five key facts emerged:
- Design release to manufacturing targets: Best-in-Class companies are 33% more likely than the Industry Average and over twice as likely as Laggards to meet design release targets.
- Direct product cost targets: Best-in-Class companies are 18% more likely than the Industry Average and 91% more likely than Laggard performers to meet direct product cost targets.
- Engineering phase development cost targets: Best-in-Class companies are 21% more likely than the Industry Average and 57% more likely than Laggards to meet these.
- Satisfying customer or market requirements: Best-in-Class companies are 12% more likely than the Industry Average and 52% more likely than Laggards to meet these requirements.
- Cost and time challenges: Best-in-Class companies consistently balance cost and time challenges and are able to meet release to manufacturing and engineering phase development costs at an 88% or better average, while Laggard organizations struggle to meet these targets as much as 50% of the time.
“The Best-in-Class's capacity to consistently achieve engineering targets takes on additional meaning in light of the multifaceted pressures on these organizations,” say Aberdeen’s analysts. “For example, shrinking schedules is the top pressure on engineering organizations, and while the Best-in-Class are hitting their targets at a high pace, the Laggards are struggling, meeting release to manufacturing targets only 42% of the time and engineering-related development costs only 57% of the time. These companies are no less aware that speed and cost are a problem, but they are still searching for the means to resolve it.”
Strategies for Success
The research showed that Best-in-Class organizations are pursuing two sets of strategies at a faster rate than other companies:
- Within their own domain, engineering executives are assessing product performance early, capturing and redeploying engineering knowledge, designing in a modular fashion, planning to protect intellectual property, and deploying lean principles throughout their organization.
- As part of a larger product steering council, these executives are also engineering their products for the enterprise and the environment by designing for service, for cost or manufacturing considerations, for quality, and by designing more green or eco-friendly products.
Actions that must be taken to achieve Best-in-Class performance include the following:
- Assess product performance digitally in the design phase, using simulation and analysis applications
- Correlate simulation and test results with CAT applications
- Assess product regulatory compliance, quality, serviceability, and cost with specialty applications and plug-ins
- Create, track, and manage interfaces and map requirements and product capabilities down to subsystems and subassemblies
- Deploy Lean methodologies in the engineering organization to gain operational efficiencies.
“To optimize performance, the Best-in-Class are assessing their products against more than just form, fit, and function,” the researchers report. “They have extended their focus to include compliance (85% vs 65%), quality (79% vs 64%), serviceability (81% vs 57%), and raw material costs (84% vs 67%). They enable this approach with applications and plug-ins that automate assessments of compliance (45% more likely), quality (47% more likely), and cost (30% more likely).”